H.R.25 - Fair Tax Act

To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States.
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Official: To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States. as introduced.

This, like most other bills sponsored by the republicans, will only help to strengthen the plutocracy that has been growing in the United States by increasing the gap between the wealthiest and the poorest. The income tax that currently exists is progressive, which means that the richest Americans pay more (because they can afford to pay more), but a sales tax would do the opposite. Rich people tend to spend a smaller percentage of their income than poor people, preferring to invest the remainder. This means that with a national sales tax and no income tax, lower- and middle-class Americans would actually be taxed a greater percentage of their income than the upper-class would. In a tough economy like this one where the middle-class is struggling, this is not something that we need.

I understand what you are saying. I don’t feel that our current tax structure is fair enough. Personally I feel if you buy a TV for $1500, no matter your income you should be taxed the same. Just because someone with money has the ability to save and invested doesn’t mean they should be treated differently or taxed more because they have more. Some of them have worked really hard to have more and I don’t feel they should be punished because of their hard work.

I have worked hard to get where I am now. I not going to just lay down all my hard work for someone that is not willing to work. I personally feel that a flat tax or a sales tax is the way to go. As stated above, rich or poor, you should be tax the same as any other person.

An important thing to consider is provisions to allow for a “prebate” for the taxes that would be paid living at the poverty line.

This would offset the tax burden on low-income families and individuals in the same way as the income tax rebate. You could live “tax free,” assuming your comfortable with the quality of life only spending $20k a year can get you.

This bill would also eliminate taxes on personal savings and savings for education. I understand Soichiro’s point on the proportion of investment vs spending in the upper income levels, but you also have to consider that the general cost-of-living for a wealthier individual is higher, meaning a higher tax burden.

Does anyone know the status of “capital gains?” It’s not mentioned in the description and, correct me if I’m wrong, wouldn’t that cover money made in “investments” [ie the stock market]?

If taxes are remited in the price of goods and services then whey did the cost of everything increase after George W. Bush cut taxes in 2001? Rent went up, health care costs went up, building a house got more expensive, but goods that came from China got cheaper. When businesses get tax cuts they raise their prices because, after all, they get to keep more of it. Then everybody acts surprised when consumer spending drops.

That is absurd! the idea that tax cuts cause price increases implies that tax hikes must cause price decreases, but that is nonsense! Also, job growth was faster under the Bush tax cuts. In fact, unemployment was lower when republicans were in power, and getting smaller, and Bush was weaning off having high debts (the deficit each year was getting smaller and smaller). Then Democrats had power and debt was raised, and unemployment rose. Also, over time, the price of everything increases, due to inflation.

Keenen – First off, the tax cuts in 2001 did not lower the taxes on businesses. The business tax remained at a lofty 35%. The tax cuts were on individual taxes. Hence, the reason you didn’t see anything go down.

Now, contrary to your claims (which you offered no proof), there was a thing called 9/11 that occurred in 2001. And that drove the speculators in Chicago to start driving prices up on things like oil. So we saw that reverberate throughout the economy.

Health care has been constantly rising for a variety of reasons. Mainly the greed of the insurance companies.

No offense but you need to “invest” some money in your education and take a basic Macro and Micro economics class available at your local Community College near you!

Soichiro is correct, this 23 or 28% sales tax across the board will disproportionally hit lower and middle income families/citizens at a time when the economy is already at it’s knees.

However, as shomas says, right now Corporate taxes are at 35% which is a contributing factor to Companies within the US and outside the US whether they choose to produce a product in the US or Canada who by the way has been lowering their Corporate taxes lately and next year will be just 15%!

Of course if you were a large Company and you had the choice of paying big Government 35% of your earnings or 15%, what Country would you choose to start producing in?

I would like to see a summary of what an individual will pay tax on in the way of service and consumer goods. I tried to figure out what is and is not taxed, but it wasn’t too clear to me. I think it said there is a sales tax on rent, real estate, and ‘consumer goods,’ but I wasn’t sure if that included food or not. No tax on items purchased for business or investment. Taxable services aren’t real clear, either; apparently a business pays sales tax on salaries and benefits paid to employees for their work unless they are “employed in the regular course of business,” which I don’t understand; why else would they employ anyone? Maybe they mean outside people or part time people. Payments to domestic workers are taxed.

Very good post. I realize that I was totally wrong about this issue. I guess you learn something new every day. Lesson learned Ms. Right! Nice website, informative on the road.Criminal Defense Attorney Carson City Nevada

All taxation is theft, but it seems a necessary evil in a civilized society. If we must accept taxation, it seems best to structure it in a way that individuals can control when, where and how much taxes they pay. This way the “pursuit of happiness” is least infringed.

Present taxes are biased, unfair, and full of coercive language intended to change behavior.

There is no income or sale to pay tax on without consumers. Through the lens of consumption, consumers pay the cost of taxes. Taxing income fines consumers of “American made”. While most countries have a consumption tax to lower taxes embedded in exports and tax consumption of imports, we punish consumers for buying American. The fairtax taxes every ones consumption of domestic or imports the same at the register. No bias means more fair. The fairtax treats every one the same. Free trade is made more fair.

The fairtax rebate untaxes every families poverty level consumption, removes any need for deductions or exemptions, and returns roughly 90% of $350 billion and 7.4 billion hours preparing taxes to spend as the people desire, or with families, or building a business providing products and services people actually want, by eliminating tens of thousands of pages of coercive language.

I don’t disagree with your first statement, but don’t totally agree with it either. :) However, the burden of taxes are shared by both consumer and the seller. Albeit the consumer does bear the brunt of the tax when imposed.

I’ve lived overseas, Japan, Korea, Germany and visited England, France, Austria etc., I’ve paid what is called Value added Tax otherwise known as VAT on items purchased in stores as a consumer. I’m curious, have you? In those countries I just laid out, all have extremely high income taxes as well!

To combat the “China’s” of the world, as a country we can impose what is called a Tariff, which is essentially a tax on any imported goods, of course this can be pinpointed to specific types of goods and on a graduated basis depending on the good. This coupled with a Flat tax rate on income will accomplish your last paragraph as deductions and exemptions will be removed. This is the direction I would like to see the US go…

You are incorrect in assuming that the FairTax will “disproportionally hit lower and middle income families/citizens”. Take a few minutes to look into the Prebate and how it untaxes those families/citizens. You may be surprised to know that a family of 4 spending $30,000/year will actually have a FairTax rate of 0%; whereas the same family of 4 spending $2M/yr will pay the full FairTax rate of 23%.

Our current tax structure isn’t fair enough because of the loopholes rich lobbyists pay politicians to keep open. How about instead of corrupting Congress with their money just pay the tax they owe. They already got tax cuts remember? Still not fair? What’s going to happen to the family of three that has a household income of 40k? The fair tax law says keep the $3600 or so you would have owed otherwise but everytime you go to the store you’re paying a 23% tax on top of the state’s 6-10%. Your grocery bill just jumped from $200 to $266 every week. that’s $3432 worth of tax every year just on groceries. This family can forget about buying a used car if they need one to get to work. A $3000 honda civic really costs $3990.

First, since the Fair Tax would get rid of corporate taxes, payroll taxes, etc., which are built into the cost of the car and make up a good portion of the car’s cost, the base price of cars would go down and after you tacked on the 23% it would only cost a little bit more than originally.

Second, since you wouldn’t have taxes on income and capital gains, people would have more to spend.

Third, the estimated amount that we would save on the simplified compliance with the tax code is about $400 billion. That’s because currently employees and individuals spend a lot of time filing their taxes when it could be used on other things. We’d also save several billion per year by being able to cut the IRS down to a fraction of its current size. Currently 30% of the income taxes collected are spent as a cost of collecting them.

Fourth, most states project that they would be able to lower their rates as well due to the ease of compliance.

A flat tax is still a tax on income. We started with that in 1913. Look where it went. There are too many loopholes that get added to it creating a large mess. There is still the payroll taxes in place which is the most regressive tax around. It hurts the low income people the most. The FairTax eliminates all of these. The prebate eliminates any need to untax the basic necessities. Low income people can buy used goods and avoid paying taxes. It is also good for the environment as items are recycled. The wealthy will be paying more dollars in taxes because they will buy new and expensive items.

If there were provisions on this bill from putting a tax on the necessities… there should be no tax on shelter, food, water, or anything relating to personal health… that way the purchasing power of poor to middle income families is not diminished by the 23% sales tax… I would also want the estate tax to stay in place and the income tax for the richest and wealthiest bracket.

The fact that if you live under poverty, you have to register as such and then receive either a monthly check or a “smart card” (probably a visa giftcard) with the value on it. I am sure a stigma will develop the same way it has around food stamps, that by using these smart cards or going to the bank to cash the check you are viewed as a negative in the greater community…

For this reason and the fact that without those provisions this tax is not progressive enough, I can not support this bill…

I see the opposite effect. If the “smart card” were rolled in with WIC and Food Stamp cards, we could remove redundant bureaucracy and de-stigmatize our social safety net. An individual could apply for WIC, CHIP, and Tax Prebate, and housing help at one office, in one sitting, with one set of documents.

I may qualify for the prebate, but not food stamps. Another individual may get on food stamps and get to a point where they are not in need of the safety net. Since they must update their information with this office when applying for tax prebate (incentive), we can streamline and make our social systems more efficient and nimble.

What about a waiver, similar to how Section 8 Housing works, to offset shelter costs?

This would be based on average housing costs and wages. The tax credit could be applied for when signing a new lease with the funds going to the landowner in exchange for subsidized rent.

In adopting the fairtax society says we do not want to tax anyones poverty level consumption, the rebate is what you over payed. The fairtax rebate goes to every family (rich or poor) and ensures no family pays taxes on their poverty level spending.

Considering that it is the consumer of american made that pays the cost of business taxes like corporate income tax, capital gains tax, employer payed payroll taxes. further more it is deductions and exemptions that have made our present tax code too complex regressive hidden in the cost of everything we buy. costing $350 to $450 billion annually to prepare taxes directly when we goto a tax preparer or indirectly when we purchase from a business that payed to have taxes prepared. Our present tax is really not as progressive as you think.

At least with the fairtax you will know how much you are actually paying.

Your requests would not be fair then… If I read right, food is not taxed, nor education. If you read (see link below) this report you will see that the poor and middle class are favored a bit with the fairtax. The bill will lift a large percentage the poor out of the poor class, eventually. The middle class wages will go up some 14% within 10 years. This was even mentioned (and praised) by the 2005 congress.

Interesting ideas. Personally, I can’t support this bill, because snuck into it is repeal of of our public financing for presidential elections. Politics as usual. Taking into account your points, I would support the bill if they did the following.

- Not repeal public financing for presidential elections
- Keep the estate tax (it serves a different purpose by preventing family empires from building)
- Allow non-profits to still make tax-exempt purchases

With probate the tax is progressive, but not as much as the current system. I’m fine with that as long as the poor are taken care of. As for stigma in relations to the probate, this will be somewhat eliminated in that the probate allows for direct deposit. Also, since there already is a stigma with food stamps this wont change anything.

I’m a little confused with what’s wrong from allowing family empires to build. I’m in no way wealthy or rich or even in the high middle class, but if I did somehow manage to create a good/service/business that prospered instead making me extraordinarily wealthy, then why should I be penalized for wanting to pass that on to my family when I die? And if my children grew the business more than I did, and wanted to pass it on to their children, then why should they be penalized for such? We’ve only had these taxes for 98 years, they’re not mandatory that we keep them, the system can change. And being honest, the system hasn’t worked out the last 100 years like we hoped, it is time for change.

You make some interesting points and to be honest the estate tax isn’t a point that will ultimately stop me from supporting the bill. My biggest concern is with the elimination of public funding for presidential elections (SEC 104 (a) (1)), which I believe should be a different debate.

As for the estate tax, my reservations with it fall under the same category as the too big to fail corporations. More importantly, when a corporation has too strong of foothold in a single market it his power which eliminates competition and ultimately the quality and quantity of products will fall while prices tend to rise in these scenarios.

In the same light, I believe family empires can have a similar effect. When a single person owns too much of the country’s wealth and that person pulls out his or her investment in a sector of the economy that industry could have the potential of collapsing. The idea of prevent companies from getting too large is to limit the power they have on individual markets so risk can be spread out as well as allowing competition to prosper. It is no different with a person.

Furthermore, the financial legacy a family can impose on society can have catastrophic consequences to a democracy. Imagine if only the Clintons ran for public office, because only they could afford to since their wealth far outstretched the rest of society. Just to be clear, I don’t believe we should limit the potential of a single person within his life-span, that would be contrary to the American Dream. Nonetheless, the estate tax (though I’m always open for reform) serves a valid purpose in preventing oligarchical families from controlling our country’s democracy and financial institutions otherwise all we would see in public office is Rockefellers, Morgans, and Kennedys. Many countries deal with this problem. Thankfully, the US doesn’t, but the repeal of the estate tax would be the first step down a very dark path.

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